Samsung reports a year-over-year decline in Q1 operating profits

Samsung reports a year-over-year decline in Q1 operating profits
On Tuesday morning, Samsung reported a first quarter operating profit that was 3.3% below last year's figure. The Korean based company reported an operating profit of 8.5 trillion Korean Won ($8.2 billion USD) for the three months ended in March. Samsung's mobile division reported operating profits of 6.43 trillion Won ($6.2 billion USD) in the first quarter, down 1.2% from the 6.51 trillion Won ($6.3 billion USD) in mobile operating profit reported by Samsung last year. On a sequential basis, mobile operating profits rose 19% from the 5.47 trillion Won ($5.3 billion) made by the Korean manufacturer in last year's fourth quarter.

The biggest smartphone maker on the planet was hurt by a market that was generating lower margins. As models like the Samsung Galaxy S4 got long in the tooth, it negatively affected margins in the first three months of the year. The second quarter should benefit from the release of the Samsung Galaxy S5, which was launched during the current three month period that runs through June. Samsung should be able to take advantage of the higher profit margins that come with the start of a new flagship product cycle.

Instead of focusing on high-end, high-margin smartphones, Samsung is beginning to sell low margin, cheaper handsets in emerging markets. But these models are facing tough competition from Chinese manufacturers. And if Apple launches larger-screened iPhone models later this year as expected, it could have a negative impact on sales of Sammy's high-end models.


Samsung sees a positive impact on high-end smartphone sales due to the upcoming World Cup in Brazil. In June, we could see the launch of the Samsung KQ, a premium version of the Samsung Galaxy S5 with a metal body and a 1440 x 2560 resolution screen. In the third quarter, the next iteration of Samsung's phablet is due to launch with a new form factor that could include a flexible, three-sided screen. There could be plenty of innovation to spur higher earnings for Samsung's mobile division for the remainder of the year, as long as it isnt squeezed by Apple on the high-end, and Chinese producers on the low-end.

source: Reuters

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20 Comments

1. yyuu1000

Posts: 260; Member since: Jul 26, 2012

Looks like the M8 is taking some of those profits.

4. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Sammy is trading profits for market share. Apple is trading market share for profits. One is a short-term strategy the other is a longer-term strategy. Depending on how elastic the market for smartphones is, one will be more successful than the other over time.

17. kryme

Posts: 468; Member since: Oct 24, 2013

good point but which one is long term.... i think market share is more important than profit for long term...

18. number29

Posts: 185; Member since: Jan 25, 2013

LOL, on what basis?! Guess again!

10. PapaSmurf

Posts: 10457; Member since: May 14, 2012

Lol no it isn't I'll guarantee you that.

2. drunkenjay

Posts: 1647; Member since: Feb 11, 2013

waiting in the kq phone. i hope it does get released. CANT WAIT!~

3. galanoth

Posts: 428; Member since: Nov 26, 2011

Samsung is doomed. /s

5. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

That is just like saying Apple is doomed. There is more to whether either company is doomed than whether they are trading profits or market share.

8. nctx77

Posts: 2540; Member since: Sep 03, 2013

They're doomed like the droid x

11. PapaSmurf

Posts: 10457; Member since: May 14, 2012

I think you missed the obvious sign that he was being sarcastic.

7. maccess

Posts: 742; Member since: Jan 16, 2013

Down 1.2% from 6.3 billion to 6.2 billion usd means doomed for you?? then tell me what do you think about htc.. oh not just htc but nokia sony motorolla and blackberry as well..

9. galanoth

Posts: 428; Member since: Nov 26, 2011

Of course Samsung isn't doomed That's why I put /s

12. nctx77

Posts: 2540; Member since: Sep 03, 2013

Yep! DOOMED! Blackberry FTW!

15. PapaSmurf

Posts: 10457; Member since: May 14, 2012

Blackberry doesn't even have 1% in the US or over 3% world wide. :/

6. nctx77

Posts: 2540; Member since: Sep 03, 2013

Looks like the robots got a virus.

13. mturby unregistered

It seems the GALAXY is shrinking after all!

19. androiphone20

Posts: 1654; Member since: Jul 10, 2013

The GALAXY S4 is the hottest Samsung device right now, well at least in the UK http://www.dailymail.co.uk/news/article-2600682/Mobile-phone-catches-fire-owner-leaves-charge-asleep.html A woman wakes up at 5 am and find her PHONE 'sizzling' beside her bed.

20. christophersalse

Posts: 99; Member since: Jan 19, 2014

At least it didn't shock her to death.

14. PapaSmurf

Posts: 10457; Member since: May 14, 2012

Kind of expected. Putting in better tech (AMOLED screen), camera sensors, new accessories, all while keeping the same price tag is bound to lead to a slight decline.

16. fzacek

Posts: 2486; Member since: Jan 26, 2014

They're doing the right thing. Apple is doing the opposite...

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